Encyclopedia of Chart Patterns

Why this book

For thirty years, Thomas Bulkowski has done what almost no other trading author has bothered to do: actually count. He examined hundreds — sometimes thousands — of historical instances of every named chart pattern and computed the statistics that matter to a trader: how often does this pattern break out in the expected direction, how far does price typically move afterward, how often does the move fail, what are the throwback and pullback rates, and which variants of the pattern outperform.

The third edition catalogues 75 patterns in alphabetical order — from AB=CD through head-and-shoulders to wedges and Wolfe waves — each topic following the same disciplined structure: identification rules, ideal anatomy, failure modes, performance statistics, trading tactics, and an example trade. The result is the reference book traders keep open on a second monitor.

Who it is for

Bulkowski writes for the serious retail trader who has already learned to read a chart and now wants to move from intuition to evidence. If you've ever caught yourself thinking "this looks like a double bottom, it should rally" and want to know how often that hope actually pays off, this book replaces the wish with a number.

It is not a beginner's first trading book. The topics assume you know what a breakout is, can identify support and resistance, and understand the difference between a trend and a chop. It is also not light reading — flipping through it cover-to-cover is a slog. Treat it as a reference: when a pattern shows up on your screen, find its topic, read the identification rules, check the statistics, and let the numbers tell you whether the trade is worth the risk.

How to read it

The book is organized alphabetically, but the patterns are not equally important. A handful — head-and-shoulders, double bottoms and tops, triangles, flags, pennants, cup-with-handle, broadening formations — appear constantly in real charts and account for the majority of pattern-based trading opportunities. Master those first. The harmonic patterns (Bat, Butterfly, Crab, Gartley, AB=CD, Wolfe Wave) are powerful but require more pattern-recognition skill and are best added after the basics are solid.

Each topic is self-contained, so jumping in at any pattern works. A useful entry point if you want a structural skim:

• How to Trade Chart Patterns (How to Trade Chart Patterns) — Bulkowski's own pre-flight checklist before opening a position. Read this first regardless of where you go next.
• Head-and-Shoulders Bottoms (Head-and-Shoulders Bottoms) — the most-trusted bullish reversal, with the highest success rate in the book.
• Cup with Handle (Cup with Handle) — William O'Neil's famous continuation pattern, with its high-tight-flag cousin (Ch. 36) right next door.
• Triangles, Ascending through Triple Bottoms (Triangles) — the three triangle types covered together account for a huge share of all continuation setups.
• Diving Board through Double Tops, Eve & Adam (Double Bottoms / Tops with Adam & Eve variants) — Bulkowski's biggest taxonomic contribution: separating the sharp "Adam" leg from the rounded "Eve" leg dramatically changes the statistics.

Read it as statistics on top of pictures, not stories on top of patterns. The patterns themselves are old; the numbers are what make this book worth owning.

Topic index

| Topics | Theme | | ------ | ---------------------------------------------------------------------- | | 1–2 | Introduction and Bulkowski's trading method | | 3–6 | Harmonic patterns: AB=CD and Bat (bearish/bullish) | | 7–8 | Big M and Big W reversals | | 9–14 | Broadening formations and wedges | | 15–16 | Bump-and-run reversals | | 17–18 | Butterfly harmonic patterns | | 19 | Cloudbanks | | 20–21 | Crab harmonic patterns | | 22–23 | Cup with Handle (and inverted) | | 24–25 | Diamond bottoms and tops | | 26 | Diving Board (Bulkowski's own discovery) | | 27–34 | Double bottoms and tops, all four Adam/Eve variants | | 35–36 | Flags and high-tight flags | | 37 | Gaps | | 38–39 | Gartley harmonic patterns | | 40–43 | Head-and-shoulders bottoms and tops, simple and complex | | 44–45 | Horn bottoms and tops | | 46 | Island reversals | | 47–48 | Measured moves up and down | | 49 | Pennants | | 50–51 | Pipe bottoms and tops | | 52–53 | Rectangle bottoms and tops | | 54–55 | Roof and inverted roof | | 56–57 | Rounding bottoms and tops | | 58–61 | Scallop variants (all four orientations) | | 62–64 | Three falling peaks, three peaks and domed house, three rising valleys | | 65–67 | Triangles: ascending, descending, symmetrical | | 68–69 | Triple bottoms and tops | | 70–73 | V-bottoms and V-tops (standard and extended) | | 74–75 | Wedges, falling and rising | | 76–77 | Wolfe Wave patterns | | 78–80 | Statistics summary, visual index, and license |